ITR (TRIB) Volume 11 : Part 5 Issue dated : 26-09-2011, SUBJECT INDEX

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 11 : Part 5 (Issue dated : 26-09-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

->> Charitable purposes --Registration--Society running educational institutions--No proof that funds applied for non-charitable or religious purposes--Direction to grant to retrospective registration--Income-tax Act, 1961, s. 12AA-- Karandhai Tamil Sangam v. CIT (Chennai) . . . 430

->> Charitable trust --Registration--Denial of registration as activities confined to one religion--Finding that activities not only religious but also charitable--Assessee to be given status of religious and charitable trust--Income-tax Act, 1961, s. 12A-- Kasyapa Veda Research Foundation v. CIT (Cochin) . . . 468

->> Company --Computation of profits under section 115JB--Provision for bad debts--Amount to be added to book profits--Income-tax Act, 1961, s. 115JB-- Magnum Power Generation Ltd. v . Deputy CIT (Delhi) . . . 493

->> Income from house property --Business income--Income from property or business income--Assessee constructing residential units and dealing in them--Amount received on lease of some units--Not from business--Income from property--Income-tax Act, 1961, ss. 22, 28-- Roma Builders P. Ltd. v. Joint CIT (Mumbai) . . . 503

->> Income from undisclosed sources --Survey in premises of assessee--Defects in books of account--No nexus between un-accounted profit earned and investment made in properties outside books of account--Set off allowed--Amounts to reducing additional income declared by assessee--Set off not justified--Income-tax Act, 1961-- V. R. Textiles v. Joint CIT (Ahmedabad) . . . 476

->> Income-tax survey --Accounting--Rejection of books of account--Defects in books of account--Entire undisclosed sales cannot be treated as profit of assessee--Commissioner (Appeals) applying gross profit rate--Proper--Income-tax Act, 1961, s. 145-- V. R. Textiles v. Joint CIT (Ahmedabad) . . . 476

->> Industrial undertaking --Generation and supply of power--Amount received from sale of scrap and writing back of credit balances--No finding whether credit balances related to business and whether scrap was generated by industrial undertaking--Matter remanded--Income-tax Act, 1961, s. 80-IA-- Magnum Power Generation Ltd. v. Deputy CIT (Delhi) . . . 493

->> ----Generation and supply of power--Special deduction under section 80-IA--Agreement for supply of power--Agreement providing that if power not required compensation charges to be paid--Amount received for deemed generation of power--Entitled to special deduction under section 80-IA--Income-tax Act, 1961, s. 80-IA-- Magnum Power Generation Ltd. v. Deputy CIT (Delhi) . . . 493

->> Non-resident --Advance tax--Interest--Not payable where entire income liable to deduction of tax at source--Income-tax Act, 1961, ss. 195, 234B-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

->> ----Taxability in India--Turnkey project in India--Permanent establishment--Project office in Mumbai involved in activities of project from commencement--Contract indivisible--No material to show project office concerned only with activities outside India--Mode of accounting of expenses of project office not decisive--Mumbai office constituted permanent establishment--Ad hoc attribution of percentage of income to permanent establishment not permissible--Matter remanded for determination on basis of material --Income-tax Act, 1961, s. 144C--Double Taxation Avoidance Agreement between India and Korea, art. 5-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

->> Penalty --Concealment of income--Discrepancy in accounts--Amount surrendered because auditors raided and books of account could not be produced--Explanation of assessee reasonable--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- ITO v. Dr. V . Muralikrishnan (Chennai) . . . 443

->> Perquisites --Employees stock option--Equity warrant certificates--Not by themselves securities but merely granting option to obtain shares--Date of exercise of option is date of acquisition of shares not date of certificate--Warrrant issued in February 1999 and assessee exercising option in April 1999--Perquisites arise and taxable in financial year 1999-2000 relevant to assessment year 2000-01--Income-tax Act, 1961, s. 17(2)(iiia) -- Deputy CIT v. Vijay Gopal Jindal (Delhi) . . . 451

->> Reassessment --Notice--Notice after four years--Validity--No failure to disclose material facts necessary for assessment--Returns accompanied by audited accounts--Special deduction under section 80HHC allowed after considering material on record--Reassessment proceedings after four years to reduce special deduction--Barred by limitation--Income-tax Act, 1961, ss. 80HHC, 147, 148-- Deputy CIT v. Purolator India Ltd. (Delhi) . . . 434

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

->> Double Taxation Avoidance Agreement between India and Korea :

art. 5 --Non-resident--Taxability in India--Turnkey project in India--Permanent establishment--Project office in Mumbai involved in activities of project from commencement--Contract indivisible--No material to show project office concerned only with activities outside India--Mode of accounting of expenses of project office not decisive--Mumbai office constituted permanent establishment--Ad hoc attribution of percentage of income to permanent establishment not permissible--Matter remanded for determination on basis of material-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

Income-tax Act, 1961 :

->> S. 12A --Charitable trust--Registration--Denial of registration as activities confined to one religion--Finding that activities not only religious but also charitable--Assessee to be given status of religious and charitable trust-- Kasyapa Veda Research Foundation v. CIT (Cochin) . . . 468

->> S. 12AA --Charitable purposes--Registration--Society running educational institutions--No proof that funds applied for non-charitable or religious purposes--Direction to grant to retrospective registration-- Karandhai Tamil Sangam v. CIT (Chennai) . . . 430

->> S. 17(2)(iiia) --Perquisites--Employees stock option--Equity warrant certificates--Not by themselves securities but merely granting option to obtain shares--Date of exercise of option is date of acquisition of shares not date of certificate--Warrrant issued in February 1999 and assessee exercising option in April 1999--Perquisites arise and taxable in financial year 1999-2000 relevant to assessment year 2000-01-- Deputy CIT v. Vijay Gopal Jindal (Delhi) . . . 451

->> S. 22 --Income from house property--Business income--Income from property or business income--Assessee constructing residential units and dealing in them--Amount received on lease of some units--Not from business--Income from property-- Roma Builders P. Ltd. v. Joint CIT (Mumbai) . . . 503

->> S. 28 --Income from house property--Business income--Income from property or business income--Assessee constructing residential units and dealing in them--Amount received on lease of some units--Not from business--Income from property-- Roma Builders P. Ltd. v. Joint CIT (Mumbai) . . . 503

->> S. 80-IA --Industrial undertaking--Generation and supply of power--Amount received from sale of scrap and writing back of credit balances--No finding whether credit balances related to business and whether scrap was generated by industrial undertaking--Matter remanded-- Magnum Power Generation Ltd. v. Deputy CIT (Delhi) . . . 493

->> ----Industrial undertaking--Generation and supply of power--Special deduction under section 80-IA--Agreement for supply of power--Agreement providing that if power not required compensation charges to be paid--Amount received for deemed generation of power--Entitled to special deduction under section 80-IA-- Magnum Power Generation Ltd. v. Deputy CIT (Delhi) . . . 493

->> S. 80HHC --Reassessment--Notice--Notice after four years--Validity--No failure to disclose material facts necessary for assessment--Returns accompanied by audited accounts--Special deduction under section 80HHC allowed after considering material on record--Reassessment proceedings after four years to reduce special deduction--Barred by limitation-- Deputy CIT v. Purolator India Ltd. (Delhi) . . . 434

->> S. 115JB --Company--Computation of profits under section 115JB--Provision for bad debts--Amount to be added to book profits-- Magnum Power Generation Ltd. v. Deputy CIT (Delhi) . . . 493

->> S. 144C --Non-resident--Taxability in India--Turnkey project in India--Permanent establishment--Project office in Mumbai involved in activities of project from commencement--Contract indivisible--No material to show project office concerned only with activities outside India--Mode of accounting of expenses of project office not decisive--Mumbai office constituted permanent establishment--Ad hoc attribution of percentage of income to permanent establishment not permissible--Matter remanded for determination on basis of material-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

->> S. 145 --Income-tax survey--Accounting--Rejection of books of account--Defects in books of account--Entire undisclosed sales cannot be treated as profit of assessee--Commissioner (Appeals) applying gross profit rate--Proper-- V. R. Textiles v. Joint CIT (Ahmedabad) . . . 476

->> S. 147 --Reassessment--Notice--Notice after four years--Validity--No failure to disclose material facts necessary for assessment--Returns accompanied by audited accounts--Special deduction under section 80HHC allowed after considering material on record--Reassessment proceedings after four years to reduce special deduction--Barred by limitation-- Deputy CIT v. Purolator India Ltd. (Delhi) . . . 434

->> S. 148 --Reassessment--Notice--Notice after four years--Validity--No failure to disclose material facts necessary for assessment--Returns accompanied by audited accounts--Special deduction under section 80HHC allowed after considering material on record--Reassessment proceedings after four years to reduce special deduction--Barred by limitation-- Deputy CIT v. Purolator India Ltd. (Delhi) . . . 434

->> S. 195 --Non-resident--Advance tax--Interest--Not payable where entire income liable to deduction of tax at source-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

->> S. 234B --Non-resident--Advance tax--Interest--Not payable where entire income liable to deduction of tax at source-- Samsung Heavy Industries Co. Ltd. v. Addl. DIT (International Taxation) (Delhi) . . . 513

->> S. 271(1)(c) --Penalty--Concealment of income--Discrepancy in accounts--Amount surrendered because auditors raided and books of account could not be produced--Explanation of assessee reasonable--Penalty cannot be levied-- ITO v. Dr. V. Muralikrishnan (Chennai) . . . 443

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Direct Tax Laws Sept 2011

Whether services rendered by assessee is a technical service or not, require scrutiny by Court; no final assessment order should be passed till scrutiny is over - [2011] 13 taxmann 123 (Uttarakhand)

Before order of TPO determining transfer price is passed, opportunity of hearing is to be given to assessee - [2011] 13 taxmann 122 (Bombay)

Where assessee did not disclose salary of 8 months received from former employer and showed salary of only 4 months received from new employer, provisions of section 271(1)(c) were attracted - [2011] 13 taxmann 115 (Calcutta)

Addition under section 68 could not be made where assessee had explained receipt of loan by cheques with help of bank statements and income-tax returns of creditors - [2011] 13 taxmann 114 (Delhi)

Where assessee branch office of German company received order from Indian client and negotiations and conclusion of contract were done in Germany by head office, allocation of income at 40 per cent for role played by head office was justified - [2011] 13 taxmann 124 (Delhi - Trib.)

Where difference between sale consideration in transactions with AE and ALP determined by TPO is less than 5 per cent, no addition is required - [2011] 13 taxmann 121 (Mumbai - Trib.)

Reserve created under section 80HHC can be distributed amongst partners - [2011] 13 taxmann 113 (Ahmedabad - Trib.)
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Brought forward unabsorbed losses and deficiencies of earlier years are to

Brought forward unabsorbed losses and deficiencies of earlier years are to be adjusted first against current year's profits and gains of an industrial undertaking before granting of deduction under sections 80-I and 80HH - [2011] 11 taxmann.com 260 (All.)

recent - Case Laws

Income Tax - 2009 - TMI - 34176 - HC

Concept of Mutuality – Taxability of Income received from its members – Co-operative Housing Society - High Court held that concept of mutuality can be tested considering the followings (1) Is there any commerciality involved. (2) From the moneys received are the services offered in the nature of profit sharing or privileges, advantages and conveniences. (3) Are the participants and contributors identifiable and belong to the same class in the case of cooperative housing society. (4) Do the members have the right to share in the surplus and do they have a right to deal with its surpluses. - Once these tests are satisfied, there can be no doubt that the principle of mutuality will apply to a cooperative Housing Society which has its predominant activity, the maintenance of the property of the society which includes its building or buildings and as long as there is no taint of commerciality, trade or business – Transfer fee received from its members it not taxable.

Income Tax - 2009 - TMI - 34175 - HC

Recognition as Scientific and Industrial Research Organization (SIRO) - The aims and objects of the society inter alia includes research in planetary science, astronomy – astrophysics, solar physics and allied subjects. Apart from that other objects are to popularize science among the general public of our country, to conduct short courses on science, astronomy, geography for students and teachers in schools, colleges and universities, to Publish news letters/magazines etc. - The Ministry of Science and Technology, accorded to the Petitioner, recognition as Scientific and Industrial Research Organization (SIRO) – But CBDT refused to recognize u/s 35(1)(ii) – HC after setting aside the order of CBDT ordered the Board to reconsider the matter afresh.

Central Excise - 2009 - TMI - 34174 - HC

Order of the Settlement Commission – request to pay in installments – Extra ordinary jurisdiction of High Court - it is clear that as the order of settlement commission is final and mode of recovery is also set out therein - can a writ court exercising extra ordinary jurisdiction, when the settlement commission has thought it fit not to grant any installment, grant installments assuming that under section 32F(8) there is an implied power to grant installments. This court ordinarily, ought not to interfere in the exercise of its extra ordinary jurisdiction with the order passed by the Settlement Commission - the language of section 32F(10) as it earlier stood read with section 32(7) provided for installments. That is not the case now. - the legislature has expressly done away with the power to make payment by installments. – HC refused to grant relief to pay in installments.

Income Tax - 2009 - TMI - 34173 - HC

PSU – approval of COD before filing an appeal before tribunal - ITAT refused to admit the appeal as no COD approval was obtained – In the present case, the impugned order reveals that the Tribunal has assumed powers which it does not have, for determining whether the appeal is to be admitted or not. The Tribunal has lost sight of the fact that, both the assessee and the Revenue, are statutorily vested with a right under the Act by virtue of section 253(1), 253(2) and 253(4) of the Act to file an appeal or cross-objections. Such right granted by the statute cannot be divested by the Tribunal on an erroneous assumption of powers arrogated to itself under a mistaken belief of law - The appeals filed by the assessee and the Revenue before the Tribunal stand restored to the file of the Tribunal for being heard and decided afresh on the merits in accordance with law.

Income Tax - 2009 - TMI - 34172 - HC

Rate of Depreciation – 100% depreciation on certain goods - The table includes energy saving device in the context and for the purpose of encouraging industries to adopt energy saving measures - While it was possible, in the context of encouraging industrial activity, to bring within the net of exemption, manufacture of products which may even be remotely considered as "paper" – but the same reasoning can not be adopted here - since the table indicates its intention to afford depreciation at the rates mentioned only to the specifically listed equipments - It is not even proved that a drier of the kind mentioned herein is an energy saving device – tribunal is not correct to allow 100% depreciation on fluid bed drier.

Income Tax - 2009 - TMI - 34171 - HC

How to calculate ten years for claiming exemption u/s 80HH – tribunal allowed deduction u/s 80HH for the 11th year on the ground that for the first year there was no specific previous year – held that tribunal is incorrect in allowing deduction for the 11th year – sales tax does not form part of total turnover for the purpose of calculation of deduction under section 80HHC - interest accrued but had not become due in the present assessment year is not assessable to tax for the assessee following the mercantile system of accounting

Income Tax - 2009 - TMI - 34170 - HC

Industrial Undertaking - The expression "manufacture" or "production" are different expressions and the word "production" has a wider meaning - the word "production" under section 10B considering similar expression in section 80IB will have to be given this wider meaning, considering that the expressions are not defined in the Act but the expressions are used in the same Act. The only difference between section 80-IB and section 10B is that section 10B applicable to a 100 per cent. export oriented unit, whereas section 80-IB can be in respect of any unit – held that the cutting, polishing and sizing granites amounted to either manufacturing or processing and accordingly, the assessee was entitled for deduction under section 10B of the Income-tax Act.

S. 80HHC vs. 115JB Ajanta Pharma Reversed By Supreme Court

Dear Subscriber,

S. 80HHC vs. 115JB Ajanta Pharma Reversed By Supreme Court

In CIT vs. Ajanta Pharma 318 ITR 252 the Bombay High Court held (reversing the Special Bench judgement in DCIT vs. Syncome Formulations 292 ITR (AT) 144)) that the "sunset clause" of s. 80HHC (1B) applies to s. 115JB as well.

 

This judgement has been reversed by the Supreme Court today (9.9.2010). It has been held that MAT companies are not subject to the limitations of s. 80HHC (1B).

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